“Apple has cut prices for several of its most important products on its official Chinese online store by nearly 6 percent,” Kif Leswing reports for CNBC. “The price cuts affect products including iPhones, iPads, Macs and AirPods, according to Apple’s online store in China.”
“The price cuts were in direct response to a tax change in China which lowered the value-added tax for manufacturers like Apple, according to Caixin,” Leswing reports.
“The price cuts can be seen on Apple’s website. For example, the entry-level iPhone XR now costs 6,199 yuan, 4.6 percent lower than on March 29, when Apple listed 6,499 yuan as its price,” Leswing reports. “Apple’s high-end iPhone XS and iPhone XS Max models each got a 500 yuan price cut, which works out to $74.50 at the current exchange rate.”
Read more in the full article here.
MacDailyNews Take: That should help Apple’s sales in China across the board!
So, where are the USA price cuts? Is Apple expecting us to subsidize the Chinese customers? Sort of like we subsidize the cost of medicine outside the USA.
Doesn’t sound fair to me, Apple.
6,199 yuan = 922.59 USD. That price includes a Chinese VAT of 13%. 87% of that corresponds to a price of $802.65.
Base iPhone XR is $749 USD + tax in the Apple store (US). That’s $50 less in round numbers.
So it appears your subsidy claim is not only wrong, but it’s backwards.
Gary, please take a few minutes to learn about VAT and related economic/trade issues before commenting. The Value Added Tax (VAT) is roughly like a sales tax (not exactly, but close enough) that vendors have to build into the cost of their retail products. When China cut their VAT, that enables Apple to reduce prices without impacting net revenue.
This has nothing to do with the cost of Apple products in the U.S.
This journalist is wrong. No company unilaterally drops prices based on consumer tax rates. There is zero competitive advantage to do this. Every cell phone is subject to the same VAT. Unless of course the single-party corruption chooses to interfere in the market to favor state owned enterprises.
Apple simply chose the timing of its announcement to when it would attract the maximum customer goodwill.
It is no coincidence that Apple’s trying hard to offset the avalanche of bad news released during mea culpa week. Apple is just gaming its press releases to get journalists to follow the brightest bouncing balls. Immediately after wooing true believers with subscriptions, Apple hoped everyone would ignore the Qualcomm suit loss, the death of Airpower, the poor quality keyboards, the Mac Pro no-show, the loss of a key RISC chip designer, and the Apple News server crash. All is well, Apple has a pipeline of media subscriptions to sell you this fall!
Apple’s overpriced X model phones are not selling well in China so Apple is in discount desperation mode to gain a foothold in the market. Without strong iPhone sales, then poor service revenue in the biggest market. Turns out market share actually does matter, Apple is just very slow to realize it.
VAT isn’t a “consumer tax.” It is paid by the seller. Apple chose to pass that along to its customers, rather than pocketing it as additional profit. If the lower price results in higher sales, Apple makes more money. If it doesn’t, there is no harm done, since the per-unit profit remains the same. If all Apple’s competitors do the same, there is no competitive advantage, but total sales will still rise.
Apple did not “unilaterally drop prices”. Many other luxury brand and car companies did the same.